Morgan Stanley posted fourth-quarter earnings and earnings on Wednesday that exceeded analysts’ expectations for strong trading, investment banking and wealth management results.
The firm reported a 51% increase in profit to $ 3.39 billion, or $ 1.81 per share. Excluding the integration costs of $ 189 million related to last year’s E-Trade acquisition, the profit was $ 1.92 per share, compared to the estimate of $ 1.27 by analysts surveyed by Refinitiv. $ 13.64 billion in revenue was over $ 2 billion above the $ 11.54 billion estimate.
“The company produced a very strong quarter and recorded year-round results, with excellent performance in all three companies and geographical areas,” CEO James Gorman said in a statement. “Our unique business model continues to serve us well as we continue to execute our long-term strategy with the acquisitions of E * TRADE and Eaton Vance.”
The bank’s shares increased by 1.9% in premarket trading.
Expectations were high after solid trading and banking investment results at rivals Goldman Sachs and JPMorgan Chase contributed to rising profits, and Morgan Stanley did not disappoint.
Banking generated $ 2.3 billion in revenue, half a billion dollars more than the $ 1.81 billion analyst surveyed by FactSet estimated. The results were determined by the earnings from the subscription of shares that doubled compared to a year earlier in terms of robust IPO and follow-up activity.
The stock transaction generated revenues of $ 2.49 billion, 350 million more than the estimated $ 2.14 billion. The fixed income transaction generated $ 1.66 billion, 200 million more than analysts expected.
The wealth management division generated revenue of $ 5.68 billion, nearly half a billion dollars more than analysts had anticipated, due to higher asset levels and higher tax generation activity, as well as the impact of the agreement. e-commerce.
Morgan Stanley has the largest wealth management business among the six largest banks in the United States, operations that usually benefit from growing markets. This business is bolstered by the bank’s $ 13 billion acquisition of E-Trade a year ago, and the fourth quarter is the first time E-Trade has been integrated into the larger enterprise.
$ 1.1 billion in investment management revenue eliminated analysts’ estimate of $ 1.02 billion.
Gorman managed a bit of victory in the annual update of the company’s strategic objectives, presenting the case that his company is at a turning point. The next decade will have a sustained level of revenue and yields higher than in previous periods, thanks to market share gains and Gorman acquisitions.
The company has kept its long-term goals largely unchanged, saying that the return on tangible share capital will be 17% or higher, rather than the range of 15% to 17% given a year earlier.
“We are in the growth phase of this company for the next decade,” Gorman told analysts after the results were released.
Morgan Stanley is the latest major US bank to report fourth-quarter earnings. JPMorgan and Goldman Sachs exceeded analysts’ expectations of revenue and profit from trading aids, while Citigroup, Wells Fargo and Bank of America disappointed in revenue as credit margins were squeezed.
Shares of New York-based Morgan Stanley rose 33% in 2020, down the KBW Bank index by 4.3%.
Here are the numbers:
- Adjusted profit of $ 1.92 per share compared to the estimate of $ 1.27 of analysts surveyed by Refinitiv.
- Revenue of $ 13.64 billion compared to an estimate of $ 11.54 billion.